To characterize an area of endemic leishmaniasis, aiming to test a candidate leishmania vaccine, a prospective epidemiological survey was implemented in 1999 in a rural area of Varzelândia, Minas Gerais, Brazil. From a total of 1,253 persons in 246 households, 1,170 were included, of whom 593 (50.6%) were males and 662 (56.5%) were under 21 years of age. A Montenegro intradermal test performed in 1,120 individuals and evaluated in 1,020 was reactive in 282 (27.6%). Serological testing through indirect immunofluorescence and ELISA was performed in 970 individuals (82.9%). Antibodies to Leishmania sp. were detected in 117 (13.1%) and 170 (17.5%), respectively, by the two tests. Cutaneous scars similar to those seen in American tegumentary leishmaniasis were found in 297 individuals (25.4%), 282 of whom were submitted to the intradermal test, while only 168 (59.6) were reactive. Initial leishmaniasis prevalence of 5.8% was recorded, and an annual leishmaniasis incidence rate of 4.6% was observed after one year of follow-up. The epidemiological characteristics observed in this location are suggestive of an endemic area with old colonization.